A calculated bet or series of bets with price determination and risk/reward fully contingent upon Event X occurring. It successfully occurs, but all positions remain in the red.
It is commonly witnessed when listening to a friend's dad talking about his investment rationale for making certain risky trades. His reasoning is always foolproof but the results are inevitably unfavorable.
It is commonly witnessed when listening to a friend's dad talking about his investment rationale for making certain risky trades. His reasoning is always foolproof but the results are inevitably unfavorable.
A preventable Dad Trade in the making
Industry professional: Mr. Chen, I strongly urge you to hedge against your positions in Brazilian ethanol companies with some short currency futures and some put options on the underlying stock.
Mr. Chen: Don't presume to teach me about equities sonny; I have more years of investment experience than you have in years lived. If Obama gets elected, he will subsidize corn, and ethanol production profitability will skyrocket.
Industry professional: Mr. Chen, I strongly urge you to hedge against your positions in Brazilian ethanol companies with some short currency futures and some put options on the underlying stock.
Mr. Chen: Don't presume to teach me about equities sonny; I have more years of investment experience than you have in years lived. If Obama gets elected, he will subsidize corn, and ethanol production profitability will skyrocket.
by pitbear August 12, 2010